With the March regular shareholders' meeting season underway and more listed companies nearing their record dates for dividends, concerns are growing about stock price declines tied to the ex-dividend date (the day the right to receive dividends disappears). Experts say that because the record dates are spread out by company, investors should check each timetable and proactively factor in the expected drop based on the size of the dividends.
According to the Korea Listed Companies Association on the 13th, a total of 184 corporations have record dates for dividends this month (Mar. 1–31). Of these, cash dividends account for most at 180, with three stock dividends and one in-kind dividend. From the 16th to the 31st, 172 corporations still have upcoming record dates for dividends.
The record date for dividends is the day the shareholder register is finalized. You must hold the shares as of the record date for dividends to be eligible to receive dividends. In particular, Korea settles trades two business days after the trade date (T+2), so to receive dividends you must purchase the shares up to three business days before the record date for dividends.
Accordingly, the ex-dividend occurs starting two business days before the record date for dividends. This is because investors who bought shares by the previous day and secured the right to receive dividends may sell, and new buyers cannot receive dividends. In this process, share prices tend to fall by roughly the level of the dividends.
For example, Samsung Fire & Marine Insurance and Samsung Card set their 2023 year-end dividends at 16,000 won and 2,500 won per share, respectively, and on the ex-dividend date they fell by 12,000 won (3.59%) and 2,000 won (4.82%) from the prior trading day.
By date, the day with the most record dates for dividends this month is the 31st (118). They include CJ, DB Securities, LG Electronics, LIG Nex1, ISU Petasys, Hyundai Steel and Hyundai AutoEver. Record dates for dividends are also spread across the 27th (19), the 13th (7), the 25th (5) and the 20th (4).
Experts advise that, because the record dates for dividends are dispersed, investors should carefully check the related schedules. Until 2023, before the Financial Services Commission changed the system through the "plan to improve dividend procedures" to have companies first finalize dividends and then set the record date for dividends, most listed companies used Dec. 31 of the prior year as the record date for dividends. Now, however, schedules are trending toward dispersion not only in December but also across January to March.
There is also analysis that the stock price drop on the ex-dividend date could widen as corporations' dividends increase under the value-up (corporate value enhancement) policy that has continued since last year. A person in the financial investment industry said, "Since the value-up policy, corporations' dividends have been increasing," adding, "Accordingly, the stock price drop that appears on the ex-dividend date could also expand."
However, because dividend increases mean profitability at corporations has improved, there is also an outlook that share prices could recover quickly after the ex-dividend date. Hwang Se-woon, a research fellow at the Korea Capital Market Institute, said, "An increase in a corporation's dividends means profitability has improved," adding, "Although share prices temporarily fall with dividend payments, if profitability is reflected in prices, they will recover in short order."